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To stay ahead of the pack, you must translate your organization's competitive strategy into day-to-day actions that will enable your company to win in the marketplace. This means channeling resources into the right efforts, striking a balance between innovation and control, and getting everyone pulling in the same direction. How do you accomplish all this? Continually ask the right questions, advises Harvard Business School professor Robert Simons. By posing these provocative questions, you identify critical gaps in your strategy execution processes, focus on the most important choices you must make, and understand what's at stake in each one. In this concise guide, Simons presents the seven key questions you and your team must regularly explore together: (1) Who is your primary customer? Have you organized your company to deliver maximum value to that customer?; (2) How do your core values prioritize shareholders, employees, and customers? Is everyone in your company committed to those values?; (3) What critical performance variables are you tracking? How are you creating accountability for performance on those variables?; (4) What strategic boundaries have you set? Does everyone know what actions are off-limits?; (5) How are you generating creative tension? Is that tension catalyzing innovation across units?; (6) How committed should your employees be to helping each other? Are they sharing responsibility for your company's success?; (7) What strategic uncertainties keep you awake at night? How are you riveting everyone's attention on those uncertainties? These questions force you to reexamine the unspoken assumptions underlying your strategy and analyze how it's implemented through your business processes and structures. Drawing on decades of research into performance management systems and organization design, Seven Strategy Questions is a no-nonsense, must-read resource for all leaders in your organization.

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An exercise that takes students through five stages of growth in an entrepreneurial start-up in the medical devices industry: 1.) founding, 2.) growth, 3.) push to profitability, 4.) refocusing process, and 5.) takeover by new management. At each stage, students must confront tensions in balancing profit, growth and control. Difficulties encountered in the business are due to management's attempts to design and use formal control systems to achieve profit and performance goals.

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Longitudinal study of company attempting to balance innovation and control.

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In 1989, the performance measurement systems and compensation policies of Nordstrom Department Stores unexpectedly came under attack by employees, unions, and government regulators. The case describes the "sales-per-hour" monitoring and compensation system that many believed to be instrumental in Nordstrom's phenomenal success. Illustrates how rapid company growth, decentralized management, and unrelenting pressure to perform can distort performance measurement systems and lead to undesirable consequences.

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Citibank has introduced a new, comprehensive performance-scorecard system. A regional president struggles with a tough decision: how to evaluate an outstanding branch manager who has scored poorly on an important customer satisfaction measure. This case provides a scoring sheet to be completed by the reader and an explanation of the ramifications of the decision for the business's strategy.

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A problem facing managers in the 1990s is how to exercise adequate control in organizations that demand flexibility, innovation, and creativity. How do senior managers protect their companies from control failures when employees are encouraged to redefine how they do their jobs? Today's managers must permit employees to initiate process improvements and new ways of responding to customers' needs--but in a controlled way. Fortunately, the tools to reconcile the conflict between creativity and control are at hand: Belief systems communicate core values and inspire all participants to commit to the organization's purpose. Boundary systems establish rules and identify pitfalls. Diagnostic control systems allow managers to ensure that employees are meeting goals efficiently and effectively. And interactive control systems enable top-level managers to focus on strategic uncertainties.

learning objective:

To learn four ways managers can encourage innovation among employees while also discouraging extreme behavior that can harm the company.

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This two-part case focuses on how to identify and manage strategic uncertainties in an innovative, entrepreneurial start-up company. In the (A) case, students learn about Quiet Logistics, an e-commerce fulfillment company working with high-end apparel retailers such as Bonobos, Gilt Groupe, and Zara. What distinguishes the company from its rivals is its use of Kiva robots which collect customer items within the warehouse and bring them to the appropriate work station for employees to package and prepare for shipment. Processing up to 8,000 orders per day, the robots help make Quiet Logistics a highly-efficient firm and free its workers to complete additional value-added services such as handwritten thank-you notes. The company has also developed proprietary software to collect data on productivity measures, resulting in 99.99% accuracy in its inventory system and completing orders on-time. At the end of the (A) case, students are asked to list the strategic uncertainties that should be keeping the two co-founders awake at night as they consider growth opportunities for their company.

The one-page (B) case reveals a surprising strategic twist that throws their plans into disarray. Students are asked to figure out how to respond.

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This case illustrates how to design and manage a new business that supports Internet based e-commerce fashion companies. Students are required to identify strategic uncertainties and respond to new information that disrupts the existing business model.

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This two-part case focuses on how to identify and manage strategic uncertainties in an innovative, entrepreneurial start-up company. In the (A) case, students learn about Quiet Logistics, an e-commerce fulfillment company working with high-end apparel retailers such as Bonobos, Gilt Groupe, and Zara. What distinguishes the company from its rivals is its use of Kiva robots which collect customer items within the warehouse and bring them to the appropriate work station for employees to package and prepare for shipment. Processing up to 8,000 orders per day, the robots help make Quiet Logistics a highly-efficient firm and free its workers to complete additional value-added services such as handwritten thank-you notes. The company has also developed proprietary software to collect data on productivity measures, resulting in 99.99% accuracy in its inventory system and completing orders on-time. At the end of the (A) case, students are asked to list the strategic uncertainties that should be keeping the two co-founders awake at night as they consider growth opportunities for their company.

The one-page (B) case reveals a surprising strategic twist that throws their plans into disarray. Students are asked to figure out how to respond.

learning objective:

This case illustrates how to design and manage a new business that supports Internet based e-commerce fashion companies. Students are required to identify strategic uncertainties and respond to new information that disrupts the existing business model.

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All companies claim that their strategies are customer driven. But when "customer" means any number of entities in a company's value chain--consumers, suppliers, retailers, even internal units like R&D--managers tend to lose focus, and their firms become vulnerable to competitors who have clearly defined who they serve and how. In this article, Robert Simons of Harvard Business School presents a framework that can help companies develop strategies that are truly customer-centric. The framework lays out four steps: (1) Identify the best primary customer for your business. This choice determines what resources and capabilities you invest in and how you organize your business. Amazon serves four very different types of customer (consumers, sellers, enterprises, and content providers), but it devotes the lion's share of its resources to pleasing consumers, even if that means sellers or content providers sometimes feel shortchanged. (2) Create processes to learn what your primary customer's values are. Data analytics, ethnographic research, and other methods can reveal needs and preferences that customers themselves may not be aware of. (3) Allocate resources accordingly, using one or more of the five business-model configurations: low price (Walmart), local value creation (Nestle), global standard of excellence (Microsoft), dedicated service relationship (IBM), or expert knowledge (Merck). (4) Build an interactive control process to monitor shifts in the assumptions that underlie your choices and prepare an action plan to respond.

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The widespread cheating scandal that rocked the Atlanta public school system in 2010 and 2011 illustrates how high-stakes performance pressure, without sufficient risk controls, can drive dangerous behavior. After becoming superintendent of the low-income and academically struggling Atlanta, Georgia school system in 1999, Beverly Hall implemented new measurement systems-many of them derived from business best practices-to motivate and evaluate the performance of teachers and principals. Educators whose students performed well on standardized tests received bonuses and public recognition; educators whose students fell short received reprimands, warnings, and eventually termination. With so much riding on "meeting the numbers," teachers and principals began taking drastic steps, including collaborating to change students' test answers while intimidating colleagues who threatened to expose the deception. As Atlanta students' (fabricated) test scores soared, leaders in business and politics praised Beverly Hall's data-driven approach for transforming a lagging school system into a model of success. More than a decade into Hall's tenure, multiple investigations finally exposed the scandal in Atlanta-and its terrible impact on the district's students. (For instructors who want to inject some extra energy, and fun, in the classroom, this case study provides material for students to stage skits in front of the class to illustrate how and why the cheating occurred.)

learning objective:

This case is designed to illustrate the corrosive effects of leadership gone wrong and the perils of aggressive performance measurement in the absence of values and controls.

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This video is designed to be shown as a supplement to the case, "Henkel: Building a Winning Culture" (HBP product #112060). In the video, CEO Kasper Rorsted addresses a Harvard Advanced Management Program (AMP) class and shares his views on the steps he took to build a winning culture at Henkel.

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